22 11
Important CaseImportant Case--laws of 2016 in Service taxlaws of 2016 in Service tax
ByBy
A. R. Krishnan A. R. Krishnan
J 11 2017J 11 2017January 11, 2017January 11, 2017
Bombay Chartered Accountants SocietyBombay Chartered Accountants Society
CAVEATS
Case laws have been grouped topic wise Case laws have been grouped topic wise.
Not all significant cases of 2016 have been covered – but
important ones have been covered.
Any bias in selection/ omission may be condoned.
In some cases only some issues have been considered.
11th January 2017 A. R. Krishnan & Co.2
y
The analysis herein is cryptic & no substitute for actual
reading of the cases.
22 22
CROSS BORDER TRANSACTIONS
M/s. Tech Mahindra v. CCE [2016-TIOL-709-CESTAT-MUM]
Genom Biotech Pvt. Ltd. v. CCE&C [(2016) 42 STR 918 (Tri. – Mumbai)]
3i Infotech v. CST [2016-TIOL-3340-CESTAT-MUM]
SBI Cards & payment services Pvt. Ltd. v. CST [(2016) 41 STR 846 (Tri.-Del.)]
11th January 2017 A. R. Krishnan & Co.3
Citibank N.A. v. CST [(2016) 43 STR 445 (Tri.-Chennai)]
Tech Mahindra v. CCE(2016) 44 STR 71 (Tri. – Mumbai)
2016-TIOL-709-CESTAT-MUM
Facts Salary of deputed employees for on-site
activity abroadA R i Overseas
Branch
Funds towards expenses given to branch
Customers
Branch Expensesabroad
y
India
Outside India
A - Receipts
A-(B1+B2)= Net
11th January 2017 A. R. Krishnan & Co.4
H.O.
Company’s main businessDevelopment of software for overseas customers – Exports
22 33
PaymentPayment towardstowards expensesexpenses byby HOHO toto branchbranch
RCMRCM BASBAS u/su/s.. 6666AA readread withwith TaxationTaxation ofof servicesservices (provided(provided
formform OutsideOutside IndiaIndia andand receivedreceived inin India),India), Rules,Rules, 20062006
Demand based on -
[“Import[“Import Rules”]Rules”]
(i)(i) BranchBranch andand HOHO differentdifferent personspersons..
(ii)(ii) ActivitiesActivities ofof branchbranch forfor renderingrendering serviceservice toto HOHO..
Decision
11th January 2017 A. R. Krishnan & Co.5
OverseasOverseas branchbranch andand HOHO areare distinctdistinct entitiesentities forfor thethe purposepurpose
ofof ss.. 6666AA ofof FinanceFinance ActAct..
ButBut ss.. 6666AA toto bebe readread withwith ImportImport RulesRules..
“3. Taxable services provided from outside India and received in India. - Subject to section 66A of the Act, the taxable services provided from outside India and received in India shall, in relation to taxable services -
Rule 3 of Import RulesCont…
(i) *****(ii) *****(iii) specified in clause (105) of section 65 of the Act, but excluding -(a) sub-clauses (zzzo) and (zzzv);(b) those specified in clause (i) of this rule except when the provision of taxable services specified in clauses (d) (zzzc) (zzzr)
11th January 2017 A. R. Krishnan & Co.6
provision of taxable services specified in clauses (d),(zzzc),(zzzr) and (zzzzm) does not relate to immovable property; and(c) those specified in clause (ii) of this rule, be such services as are received by a recipient located in India for use in relation to business or commerce.”
22 44
Section 66A requires taxing of taxable services rendered by an
overseas branch to its head office but the two sets of Rules
[Import Rules & PoP Rules] limit tax demand only to the
DecisionCont…
extent that these services are received in India in relation to
business or commerce. A plain reading would make it
apparent that the services referred to must be for pursuit of
business or commerce in India.
Present case branch activity exclusively for export business.
Even if tax paid – refund available under Cenvat Credit Rules.
Exporter operating through branches clearly not target of legal
fiction of branches being distinct from head office.11th January 2017 A. R. Krishnan & Co.7
The intent of Section 66A to tax the overseas branch activity
rendered to its HO in India limited to Indian business activities
of head office.
Cont…
Mere existence as a branch for the overall promotion of
objectives of primary establishment in India which is essentially
an exporter of services does not render the transfer of financial
resources to the branch taxable under Section 66A.
A branch, by its very nature, cannot survive without resources
assigned by the head office but transfer of funds not within
the purview of service tax – either pre or post 2012.
11th January 2017 A. R. Krishnan & Co.8
22 55
Genom Biotech Pvt. Ltd. v. CCE&C(2016) 42 STR 918 (Tri. – Mumbai)
[EOU & Pharmaceuticals unit]Facts
Vendor Agreement for market promotion and publicity
Genom
promotion and publicity for sale of products
abroad
India
Outside India
Demand Period post 18.04.2006
RCM u/s. 66A on amount paid towards advertising services
Demand based on balance sheet – Expenditure in Foreign
Currency11th January 2017 9 A. R. Krishnan & Co.
• Import Rules intend to tax only such services provided by aforeign service provider to an Indian recipient for pursuit ofbusiness or commerce in India. It is not intended to taxservices that are rendered in connection with business of theservice recipient outside the territory of India as in the present
Decision
case. Hence Genom not liable to pay service tax on expensesincurred abroad for overseas business [exports] under reversecharge.
• “Services that are undeniably rendered by a foreign ‘serviceprovider’ in relation to the goods sold abroad cannot be
d t b d b th l i l ti i t t t t T tpresumed to be covered by the legislative intent to tax. To taxa service using the legal fiction of import and then reimbursethat tax because the service was not required for any activitywithin the country is an exercise in futility and is contrary tothe objectives of and means devised for export promotion bythe State.
11th January 2017 A. R. Krishnan & Co.10
22 66
3i Infotech v. CST
2016-TIOL-3340-CESTAT-MUM[Business of Software development for exports]
Facts
Independent Branch
Expenses abroad for Marketing & promotion
of software abroadOutside India
HOIndia
11th January 2017 11 A. R. Krishnan & Co.
RCM on expenses incurred by Branch abroad
Basis: Expenses shown in HO accounts under Expenditure in
Foreign currency
Demand
Assessee’s Contentions
HO and Branch are separate entities
Branch is the recipient of service and not HO
Foreign currency
11th January 2017 A. R. Krishnan & Co.12
Branch is the recipient of service and not HO
Hence recipient not in India
22 77
Relying on - British Airways, M/s. Tech Mahindra, GenomBiotech Pvt Ltd, assessee’s appeal allowed based on –
Inclusion of branch expenses in HO accounts does not mean
Decision
Inclusion of branch expenses in HO accounts does not meanForeign SP (FSP) has rendered services to HO.
Even if the payments are attributable to service rendered byforeign service providers to the appellant unless the recipient islocated in India, section 66A cannot be invoked.
11th January 2017 A. R. Krishnan & Co.13
Further, reference to 'business or commerce' in rule 3(iii) inImport Rules is restricted to 'business and commerce' in Indianot to 'business and commerce' outside India – No allegationthat FSP’s services not for overseas business.
CURRENCY CONVERSION CURRENCY CONVERSION TRANSACTIONS
[USE OF CREDIT/ DEBIT CARDS]
11th January 2017 A. R. Krishnan & Co.14
22 88
Visa / Master Card
100/100/
Visa / Master Card
Domestic Transaction Cross border Transaction
FACTS
IB
Card ME
(AB)
100/-100/-
100/-100/-100/-100/-
100/-100/-
IB
Card ME
(AB)
$ 100$ 100
$ 100$ 100$100$100
??
Cardholder ME
100/-100/-
IB= Issuing Bank
ME= Merchant Establishment
AB= Acquiring Bank
Cardholder ME
Rs. 6180/-Rs. 6180/-
11th January 2017 15 A. R. Krishnan & Co.
1. Cost of goods in foreign currency (say) US$ 100
2. Exchange Rate (say)
(a) VISA exchange rate per USD (say) Rs. 60.00
Currency Conversion is as under:
(a) VISA exchange rate per USD (say) Rs. 60.00
(b) Appellant’s mark-up of about 3% of Rs.
60.00Rs. 1.80
. .
. INR for each USD Rs. 61.80
Cost of Goods recoverable in INR is 100 x 61.80 Rs. 6,180/-
11th January 2017 A. R. Krishnan & Co.16
IssueWhether service tax on “mark-up” [Rs. 1.80] isapplicable prior to 01.05.2006 under the category ofBanking and Other Financial Services as ‘credit cardservices’ ?
22 99
Tribunal held ‘mark up’ not liable for service tax - reasoning –
SBI Cards and payment services Pvt. Ltd. v. CST (2016) 41 STR 846 (Tri.-Del.)
Based on Standard Chartered Bank Larger Bench Decisionwhere it was held that interchange charges would not beconsidered as credit card service since scope of credit cardservices is not wide but restricted as captured by Para 2.2 ofthe Board Circular dated 9.7.2001 i.e. as meaning a servicewhere the customer is provided credit facility for
11th January 2017 A. R. Krishnan & Co.17
where the customer is provided credit facility forpurchase of goods and services; etc. On the same analogy,‘Mark-up’ charge directly attributable to the conversion ofcurrency is not covered under ‘credit card services’.
“Admittedly the card transaction happened outside India. Theservice in respect of such transaction is rendered, receivedand consumed outside India The card issuing appellant and
Cont…
and consumed outside India. The card issuing appellant andcardholder having normal residence in India is of noconsequence for tax liability on service rendered andconsumed outside India. The Tribunal’s decision in Cox &Kings India Ltd. (supra) is applicable to the present case. Theessence of taxability of service is that it should be taxed in thejurisdiction of its consumption. Here, the service, namely
11th January 2017 A. R. Krishnan & Co.18
jurisdiction of its consumption. Here, the service, namelyfacility of use of card for payment, is rendered outside Indiaand duly consumed by the recipient-cardholder outside India.We find service tax liability on such service is not sustainablefor want of jurisdiction”.
22 1010
Demand dropped - reasoning -
As regards credit card -
Citibank N.A. v. CST(2016) 43 STR 445 (Tri.-Chennai)
[Mark-up both on credit and debit card]
g the mark-up on foreign currency transaction in case of a credit
card is part of the cost of goods / services purchased by thecard holder and is not a consideration for extending creditfacilities.
‘mark-up’ is essentially a part of the exchange rate that is tobe applied for arriving at the cost of goods or services
11th January 2017 A. R. Krishnan & Co.19
purchased by the card holder and hence is a part of the cost ofgoods / services purchased which are recoverable from theuser and is not a consideration for the services of providingcredit to the user.
Also SBI Cards and Payment Services Pvt. Ltd. followed
As regards debit card –
Department not correct in demanding service tax on ‘mark-up’
Cont…
Department not correct in demanding service tax on mark upin respect of debit card transactions under ‘operation of bankaccount’ under Banking and Other Financial Services thoughissue identical to ‘mark-up’ in respect of ‘credit card’transactions.
In any case ‘mark-up’ (in debit card also) is essentially to
11th January 2017 A. R. Krishnan & Co.20
y p ( ) ymeet the foreign exchange fluctuations for arriving the cost ofthe goods/ services purchased by the card holder.
22 1111
FREIGHT FORWARDER (AIRLINE & SHIPPING INDUSTRY)
Greenwich Meridian Logistics (I) Pvt. Ltd. [(2016) 43 STR 215 (Tri-Mum)]
DHL Lemuir Logistics Pvt. Ltd. [2016-TIOL-1455-CESTAT-MUM]
Phoenix International Freight Services P. Ltd. [2016-TIOL-2353-CESTAT-MUM]
Global Transportation Services Pvt Ltd [2016 TIOL 20 ARA ST]
11th January 2017 A. R. Krishnan & Co.21
Global Transportation Services Pvt. Ltd. [2016-TIOL-20-ARA-ST]
Circular No. 197/7/2016-ST dated 12.08.2016
Shipping industry2 Scenarios
Freight Forwarder Steamer Agent
Issue
11th January 2017 A. R. Krishnan & Co.22
Applicability of service tax on Ocean Freight Surplus (OFS)
22 1212
Ocean Freight received from Shipper for transportation of goods by sea in international waters
10,000/-
Freight Forwarder – OFS
Amount Paid to shipping line for slot 8,000/-Profit 2000/-
Whether profit is liable for Service Tax?
ISSUE
11th January 2017 A. R. Krishnan & Co.23
• Pre 1/7/12 under BAS
• Post 1/7/12 as ‘service’
Ocean Freight received from shipper for transportation of goods
10,000/-
Tariff rate payable to principal (Shipping line) 9,000/-
Streamer Agent - OFS
Less: Agency Commission 5% on Rs. 9,000/- 450/-Remitted to shipping line 8,550/-
Service Tax paid on agency commission of Rs. 450/-
11th January 2017 A. R. Krishnan & Co.24
ISSUEWhether service tax is payable on the Ocean Freight Surplus of Rs. 1,000/- [ Rs. 10,000 – Rs. 9,000/-]
22 1313
Freight ForwarderOcean Freight
Surplus
11th January 2017 A. R. Krishnan & Co.25
Greenwich Meridian Logistics (I) Pvt. Ltd. (2016) 43 STR 215 (Tri-Mum)
FACTSFACTSSteamerSteamer agencyagency businessbusiness AppellantAppellant aa steamersteamer agentagent –– receivingreceiving commissioncommission fromfrom ShippingShipping LineLine
onon whichwhich taxtax paidpaidonon whichwhich taxtax paidpaidFreightFreight forwardingforwarding businessbusiness AppellantAppellant alsoalso aa multimulti--modalmodal transporttransport operatoroperator wherebywhereby itit assumedassumed
responsibilityresponsibility forfor safesafe custodycustody ofof cargocargo asas commoncommon carriercarrier quaqua shippershipper ProcuresProcures containercontainer slotslot onon aa vesselvessel byby makingmaking paymentpayment ofof freightfreight toto
LineLine andand sellssells thethe samesame toto thethe shipper/shipper/ consignorconsignor atat aa profitprofit –– thethedifferencedifference beingbeing accountedaccounted asas ‘Ocean‘Ocean FreightFreight Surplus’Surplus’
11th January 2017 A. R. Krishnan & Co.26
differencedifference beingbeing accountedaccounted asas OceanOcean FreightFreight SurplusSurplus
Revenue’s contention – Freight forwarding Surplus AppellantAppellant hadhad undertakenundertaken toto dodo promotionpromotion && marketingmarketing ofof thethe servicesservices
ofof clientclient (presumably(presumably shippingshipping line)line) andand thethe oceanocean freightfreight surplussurplusearnedearned byby itit waswas liableliable forfor STST underunder BASBAS
22 1414
Ocean freight surplus not liable for ST under BAS
•• TheThe factfact thatthat oneone lineline ofof businessbusiness vizviz..,, steamersteamer agencyagency businessbusinessattractsattracts serviceservice taxtax onon commissioncommission doesdoes notnot ipsoipso factofacto meanmean allall
Tribunal held
receiptsreceipts ofof samesame kindkind areare exigibleexigible toto serviceservice taxtax.. Each source ofincome must be looked at independently relying on Bax Global IndiaLtd. v. CST [(2008) 9 STR 412 (Tri.-Bang.)]
•• TaxabilityTaxability ofof receiptreceipt doesdoes notnot dependdepend uponupon nomenclaturenomenclature inin A/A/cc..ss butbutbasedbased onon descriptiondescription && definitiondefinition ofof taxabletaxable serviceservice..
11th January 2017 A. R. Krishnan & Co.27
•• AppellantAppellant byby issuingissuing multimodalmultimodal B/LB/L takestakes responsibilityresponsibility ofof goodsgoods andandcommitscommits toto deliverydelivery atat consigneeconsignee endend –– toto ensureensure safesafe deliverydelivery ititcontractscontracts withwith carriercarrier withoutwithout dilutingdiluting itsits responsibilityresponsibility toto shipper/shipper/consignorconsignor –– shippershipper isis notnot privyprivy toto contractcontract betweenbetween thethe appellantappellantandand carriercarrier
•• Space/Space/ slotsslots areare bookedbooked inin vesselvessel byby appellantappellant inin anticipationanticipation ofof
demanddemand andand riskrisk ofof nonnon--usageusage ofof procuredprocured spacespace devolvesdevolves uponupon thethe
appellantappellant –– suchsuch assumptionassumption ofof riskrisk doesdoes notnot fallfall withinwithin scopescope ofof
agencyagency functionfunction
Contd…
agencyagency functionfunction
•• PaymentPayment ofof freightfreight toto shippingshipping lineline && collectioncollection ofof freightfreight fromfrom shippershipper
areare twotwo independentindependent principalprincipal toto principalprincipal transactionstransactions
• The Ocean freight surplus earned arises from purchase and sale of
space and not by acting for a client who has space or slot on a vessel.
11th January 2017 A. R. Krishnan & Co.28
• The purchase and sale of space is on own a/c of appellant & not as
promotion/ marketing of a client [Shipping line]
HENCEHENCE OCEANOCEAN FREIGHTFREIGHT SURPLUSSURPLUS WOULDWOULD NOTNOT BEBE LIABLELIABLE FORFOR SERVICESERVICE
TAXTAX UNDERUNDER BUSINESSBUSINESS AUXILIARYAUXILIARY SERVICESSERVICES
22 1515
DHL Lemuir Logistics Pvt. Ltd.2016-TIOL-1455-CESTAT-MUM
[Analysis only to the extent of freight forwarder issue]
AppellantsAppellants engagedengaged byby consignorsconsignors forfor transporttransport ofof goodsgoods throughthrough AppellantsAppellants engagedengaged byby consignorsconsignors forfor transporttransport ofof goodsgoods throughthrough
airlineairline.. TheyThey prepre--bookbook spacespace fromfrom airlineairline atat reducedreduced raterate && givegive
thethe spacespace toto customerscustomers onon incentive/incentive/ profitprofit recordedrecorded inin booksbooks asas
‘airline‘airline incentive’incentive’
11th January 2017 A. R. Krishnan & Co.29
RevenueRevenue demandeddemanded STST onon thesethese incentivesincentives onon thethe groundsgrounds thatthat
thethe samesame waswas aa considerationconsideration forfor marketingmarketing ofof servicesservices providedprovided
byby thethe clientclient..
TribunalTribunal HeldHeld::--
PrePre--bookingbooking ofof slotslot fromfrom airlineairline && sellingselling samesame toto consignorconsignor –– 22 independentindependent
transactiontransaction
Appellant’sAppellant’s clientclient isis consignorconsignor && notnot thethe airlineairline.. SpaceSpace offeredoffered byby airlineairline notnot
marketedmarketed butbut prepre bookedbooked spacespace (brought)(brought) isis soldsold byby appellantappellantmarketedmarketed butbut prepre--bookedbooked spacespace (brought)(brought) isis soldsold byby appellantappellant
ClientClient beingbeing anan essentialessential ingredientingredient inin thethe renderingrendering ofof taxabletaxable serviceservice;; thethe clientclient isis
thethe oneone whowho payspays thethe considerationconsideration forfor renderingrendering ofof serviceservice.. NoNo recordrecord ofof anyany
receiptsreceipts flowflow fromfrom airlinesairlines asas clientsclients.. OnOn thethe contrary,contrary, thethe appellantappellant payspays thethe
airlinesairlines forfor bookingbooking ofof spacespace inin aircraftaircraft.. TheThe airlines,airlines, therefore,therefore, lacklack thethe
distinguishingdistinguishing characteristicscharacteristics ofof aa clientclient
11th January 2017 A. R. Krishnan & Co.30
distinguishingdistinguishing characteristicscharacteristics ofof aa clientclient..
ProcurementProcurement ofof spacespace onon ownown behalfbehalf && sellingselling itit toto consignorconsignor -- hencehence appellantappellant notnot
commissioncommission agentagent ofof airlineairline.. NotNot liableliable toto paypay serviceservice taxtax asas commissioncommission agentagent ofof
airlineairline..
GreenwichGreenwich MeridianMeridian LogisticsLogistics followedfollowed
22 1616
Phoenix International Freight Services P. Ltd.2016-TIOL-2353-CESTAT-MUM
NetNet incomeincome earnedearned asas freightfreight forwarderforwarder notnot liableliable forfor serviceservice taxtax
[Restricted to the analysis of freight forwarder ]
NetNet incomeincome earnedearned asas freightfreight forwarderforwarder notnot liableliable forfor serviceservice taxtax
sincesince
AppellantAppellant notnot renderingrendering anyany serviceservice eithereither toto customercustomer oror toto
thethe shippingshipping lineline.. NoNo BASBAS renderedrendered byby thethe appellantappellant
T ib lT ib l d i id i i ii G i hG i h M idiM idi L i tiL i ti dd DHLDHL
11th January 2017 A. R. Krishnan & Co.31
TribunalTribunal decisiondecision inin GreenwichGreenwich MeridianMeridian LogisticsLogistics andand DHLDHL
LemuirLemuir logisticslogistics followedfollowed
Global Transportation Services Pvt. Ltd.2016-TIOL-20-ARA-ST
WhetherWhether freightfreight marginmargin recoveredrecovered byby applicantapplicant fromfrom thethe shippershipper inin respectrespect ofof ––
Issue before AARIssue before AAR
(a)(a) OutboundOutbound shipmentshipment byby air/air/ seasea liableliable forfor STST inin viewview ofof RuleRule 1010 ofof PoPsPoPs RulesRules..
(b)(b) InboundInbound shipmentshipment byby air/air/ seasea bebe exemptedexempted fromfrom paymentpayment ofof serviceservice taxtax u/su/s..
6666DD ofof thethe ActAct..AAR heldAAR held
ApplicantApplicant contractscontracts withwith shippershipper toto provideprovide transportationtransportation ofof cargocargo &&
ti tti t ithith i li /i li / hi ihi i lili kiki && titi ff t t tit t ti ff
11th January 2017 A. R. Krishnan & Co.32
negotiatesnegotiates withwith airline/airline/ shippingshipping lineline seekingseeking spacespace && timetime forfor transportationtransportation ofof
cargocargo
ApplicantApplicant doesdoes notnot contractcontract withwith airline/airline/ shippingshipping lineline onon behalfbehalf ofof shippershipper asas
anan intermediaryintermediary
22 1717
Cont…•• InIn casecase ofof damage/damage/ destructiondestruction ofof cargocargo applicantapplicant toto havehave rightright toto
recoverrecover damagesdamages fromfrom airlineairline && shippershipper toto havehave rightright toto recoverrecover
damagesdamages fromfrom applicantapplicant –– applicant’sapplicant’s agreementagreement withwith airline/airline/
hh ll ll ll bb ddshippingshipping lineline isis onon principalprincipal toto principalprincipal basisbasis andand notnot asas anan agentagent..
•• SinceSince applicantapplicant providingproviding servicesservices onon ownown accountaccount itit isis notnot anan
‘intermediary’‘intermediary’.. Accordingly,Accordingly, PoPPoP ofof applicant’sapplicant’s servicesservices wouldwould bebe
governedgoverned byby RuleRule 1010 && notnot RuleRule 99(c)(c)..
•• InIn absenceabsence ofof specificspecific exclusionexclusion inin RuleRule 1010,, revenue’srevenue’s contentioncontention thatthat
11th January 2017 A. R. Krishnan & Co.33
onlyonly servicesservices ofof actualactual transportationtransportation ofof goodsgoods byby airline/airline/ shippingshipping
lineline wouldwould bebe coveredcovered u/ru/r.. 1010 isis incorrectincorrect.. EvenEven aa personperson whowho
arrangesarranges forfor suchsuch transportationtransportation ofof goodsgoods wouldwould bebe coveredcovered byby RuleRule
1010 ofof POPSRPOPSR..
Cont… SinceSince asas perper RuleRule 1010,, PoPPoP ofof outboundoutbound shipmentshipment waswas outsideoutside IndiaIndia nono
serviceservice taxtax wouldwould bebe payablepayable onon freightfreight marginmargin receivedreceived onon outboundoutbound
shipmentsshipments..
AsAs regardsregards freightfreight marginmargin onon inboundinbound shipmentsshipments AsAs regardsregards freightfreight marginmargin onon inboundinbound shipmentsshipments
PeriodPeriod uptoupto 0101..0606..20162016 -- sincesince transportationtransportation ofof goodsgoods byby aircraft/aircraft/
vesselvessel fromfrom placeplace outsideoutside IndiaIndia toto IndiaIndia wouldwould bebe coveredcovered underunder
negativenegative listlist –– ss.. 6666D(p)(ii)D(p)(ii) -- NoNo serviceservice taxtax wouldwould bebe payablepayable..
PostPost 0101..0606..20162016 -- airair freightfreight marginmargin onon inboundinbound shipmentshipment wouldwould bebe
exemptexempt underunder entryentry 5353 ofof NotNot.. 2525//20122012..
11th January 2017 A. R. Krishnan & Co.34
exemptexempt underunder entryentry 5353 ofof NotNot.. 2525//20122012..
NoNo commentscomments onon InboundInbound shipmentshipment byby vesselvessel postpost 0101..0606..20162016..
22 1818
Freight Forwarding Transaction Fact Proof
Some musings
Document
MTD Only separate invoice
House B/L,
11th January 2017 A. R. Krishnan & Co.35
Airway bill
CBEC Circular
Board had issued a Circular wherein it has pointed out certain
crucial factors to determine when freight forwarders act as a
Circular No. 197/7/2016-ST dated 12.08.2016On Freight Forwarding
crucial factors to determine when freight forwarders act as a
principal. They are:-
They negotiate rates with carriers as well as shippers;
They raises invoice on the shippers;
They take legal responsibility for the transportation of the
11th January 2017 A. R. Krishnan & Co.36
They take legal responsibility for the transportation of the
goods and undertake all the attendant risks.
FF when acts as a principal - not liable to pay service tax in case of outbound shipments
22 1919
Ocean Freight received from shipper for transportation of goods
10,000/-
Tariff rate payable to principal (Shipping line) 9,000/-
Steamer Agent Surplus
Less: Agency Commission 5% on Rs. 9,000/- 450/-Remitted to shipping line 8,550/-
Service Tax paid on agency commission of Rs. 450/-
11th January 2017 A. R. Krishnan & Co.37
ISSUE REMAINS AN ISSUE ?
Any Defence ?
‘Freight Surplus’ retained by agent– Whether liable
‘Surplus’ still part of ocean freight – character not altered due to
agent retaining it – not commission for agency services.
The surplus retained by the agent would remain a contractual The surplus retained by the agent would remain a contractual
liability as per the terms of the agreement with shipping line and
also as per the general law of agency (section 216 of the Indian
Contract Act, 1872)
Being a contractual liability – Not consideration for agency
11th January 2017 A. R. Krishnan & Co.38
g y g y
services – Not liable [Grey Worldwide (I) Pvt. Ltd. v. CST (2015)
37 STR 597 (Tri.-Mum.) / 2014-TIOL-1650-CESTAT-MUM; Lintas
India Pvt. Ltd. v. CST 2014-TIOL-2125-CESTAT-MUM]
22 2020
Section 216 of the Indian Contract Act,1872 which reads as
under:
“216. Principal’s right to benefit gained by agent dealing
on his own account in the business of agency. If an agent,
without the knowledge of his principal, deals in the business of
the agency on his account instead of on account of his
11th January 2017 A. R. Krishnan & Co.39
the agency on his account instead of on account of his
principal, the principal is entitled to claim from the agent any
benefit which may have resulted to him from the transaction.”
CENVAT CREDIT
M/s. Marudhan Motors v. CCE & ST [2016-TIOL-2576-CESTAT-DEL (SMC)]
Tricity Auto v. CCE [2016 (44) STR 601 (Tri-Chan.)(SMC)]
M/s. TFL Quinn India Pvt. Ltd. v. CCE [2016-TIOL-856-CESTAT-HYD (SMC)]
Godfrey Philips India Ltd. v. CCE [2016-TIOL-3096-CESTAT-MUM]
Jawahar SSK Ltd. v. CCE [(2016) 46 STR 396 (Tri. – Mum.)]
Tata technologies Ltd. v. CCE [(2016) 42 STR 290 (Tri. – Mum.)]
Aster Pvt. Ltd. v. CCE [(2016) 43 STR 411 (Tri. – Hyd.)]
OTHER IMPORTANT CASE LAWS ON CENVAT CREDIT
11th January 2017 A. R. Krishnan & Co.40
Zapak Digital Entertainment Ltd. v. CST [2016-TIOL-3323-CESTAT-MUM]
Vamona Developers Pvt. Ltd. v. CCCE & ST [(2016) 42 STR 277 (Tri. – Mum.)]
Reliance Industries Ltd. v. CCE [(2016) 45 STR 383 (Tri. – Mum.)]
Essar Steel India Ltd. v. CCE & ST [(2016) 42 STR 869 (Tri. – Ahmd.)]
22 2121
RULE 6
Reversal / payment on account of cenvat credit attributable to exempted service - present broad position w.e.f. 1.4.2016
RULE 6
Reversal / payment on account of cenvat credit attributable to exempted service - present broad position w.e.f. 1.4.2016 No credit allowed on input/input services used exclusively for exempt
services [ES].
Full credit on input / input service [FC] used exclusively for taxable services
No credit allowed on input/input services used exclusively for exemptservices [ES].
Full credit on input / input service [FC] used exclusively for taxable services[TS] allowed.
Common Credit (“CC”) for TS and ES –
Avail entire credit but pay specified % of exempt turnover [ET] subject tomax. of total credit taken [“% option”]
Reduce CC proportionately i.e. in ratio of exempt / total turnover [TT]and avail balance [“proportionate option”]
[TS] allowed.
Common Credit (“CC”) for TS and ES –
Avail entire credit but pay specified % of exempt turnover [ET] subject tomax. of total credit taken [“% option”]
Reduce CC proportionately i.e. in ratio of exempt / total turnover [TT]and avail balance [“proportionate option”]
Intimate exercise of proportionate option and follow prescribed procedure
Trading –
‘exempted service’ – listed in negative list [S.66D(e)]
Value = Higher of – Margin or 10% of Cost of Goods Sold
Intimate exercise of proportionate option and follow prescribed procedure
Trading –
‘exempted service’ – listed in negative list [S.66D(e)]
Value = Higher of – Margin or 10% of Cost of Goods Sold11th January 2017 41 A. R. Krishnan & Co.
ISSUES
Whether Trading is an exempted service prior to
1.4.2011
If so any cenvat credit needs to be reversed
Whether credit can be reversed under proportionate
th d b d t di i i l t
11th January 2017
method based on trading margin i.e. law post
1.4.2011
A. R. Krishnan & Co.42
22 2222
Cenvat credit reversalCenvat credit reversal
•• Proportionate method Proportionate method –– Whether FC to be considered or CC Whether FC to be considered or CC
credit to be considered i.e.credit to be considered i.e.
•• Whether proportionate method allowed if option not Whether proportionate method allowed if option not
exercised?exercised?
FC XET
TTCC X
ET
TTOR
exercised?exercised?
•• If option not exercised, whether specified % option on ET If option not exercised, whether specified % option on ET
can be collected irrespective of amount of credit available?can be collected irrespective of amount of credit available?
4311th January 2017 A. R. Krishnan & Co.
Treatment of Trading activityAMENDMENT w.e.f. 01.04.2011
Trading considered as ‘exempted service’ by way of
explanation to rule 2(e) defining exempted serviceexplanation to rule 2(e) defining exempted service
[Post 1.7.12 Negative List – S. 66D(e)]
Value of Traded Goods – Greater of
44
Sales price minus Cost of goods Sold (excluding purchase expenses)
10% of Cost of goods sold
11th January 2017 A. R. Krishnan & Co.
[Margin based formula]
22 2323
M/s. Marudhan Motors v. CCE & ST, 2016-TIOL-2576-
CESTAT-DEL (SMC), Tribunal held that activity of trading
cannot be considered as exempted service prior to 1.4.2011.
Therefore no cenvat credit needs to be reversed.
M/s. Marudhan Motors v. CCE & ST, 2016-TIOL-2576-
CESTAT-DEL (SMC), Tribunal held that activity of trading
cannot be considered as exempted service prior to 1.4.2011.
Therefore no cenvat credit needs to be reversed.
N.B. Orion not considered
Tricity Auto v. CCE, 2016 (44) STR 601 (Tri-Chan.)(SMC),
Tribunal held that prior to 1.4.11 trading not an exempted
N.B. Orion not considered
Tricity Auto v. CCE, 2016 (44) STR 601 (Tri-Chan.)(SMC),
Tribunal held that prior to 1.4.11 trading not an exempted
11th January 2017
p g p
service and provisions of rule 6(3)(ii)[re: reversal of cenvat
credit] not applicable.
N.B. No comment whether reversal is required or not
p g p
service and provisions of rule 6(3)(ii)[re: reversal of cenvat
credit] not applicable.
N.B. No comment whether reversal is required or notA. R. Krishnan & Co.45
M/s. TFL Quinn India Pvt. Ltd. v. CCE, 2016-TIOL-856-
CESTAT-HYD (SMC) where Tribunal held –
M/s. TFL Quinn India Pvt. Ltd. v. CCE, 2016-TIOL-856-
CESTAT-HYD (SMC) where Tribunal held –
Trading cannot be considered as service or exempted
service prior to 1.4.2011.
Some portion of credit needs to be reversed
Proportionate formula post 01.04.2011 can be adopted
Trading cannot be considered as service or exempted
service prior to 1.4.2011.
Some portion of credit needs to be reversed
Proportionate formula post 01.04.2011 can be adopted
11th January 2017
prior to 01.04.2011 also for computing the reversal of
credit attributable to trading
prior to 01.04.2011 also for computing the reversal of
credit attributable to trading
A. R. Krishnan & Co.46
22 2424
Godfrey Philips India Ltd. v. CCE, 2016-TIOL-3096-CESTAT-MUM[Only one of the issue taken for study]
FACTS
Business of manufacturing and trading in cigarettes
HODelhi(ISD)
FactoryMumbai (Registered)
D1 D2 D3 D4
11th January 2017 A. R. Krishnan & Co.47
D1(ISD)
D2(ISD)
D3(ISD)
D4(ISD)
Clearing Excisable goods
Trading Excisable goods
Trading Trading TradingExcisable goods
Excisable goods
Factory avails credit of input, input services and capital goods
At depots no credit availed on input services exclusively used
for trading
Factory avails credit of input, input services and capital goods
At depots no credit availed on input services exclusively used
for trading
Common credit at HO and depots distributed to factory as ISD Common credit at HO and depots distributed to factory as ISD
MAIN ISSUE Prior to 1.4.2011, if cenvat credit attributable to trading is to
11th January 2017 A. R. Krishnan & Co.48
be reversed, what is the formula based on which it needs to
be reversed
22 2525
The issue was only on common input services to be
reversed No contest was made on –
Wh th t di i t i i t 1 4 2011
The issue was only on common input services to be
reversed No contest was made on –
Wh th t di i t i i t 1 4 2011• Whether trading is an exempt service prior to 1.4.2011
• Is there a need for reversal
Appellant argued formula prescribed post 1.4.2011 to be used
for pre 1.4.2011 i.e. margin based instead of total sales value
since margin indicates value addition
• Whether trading is an exempt service prior to 1.4.2011
• Is there a need for reversal
Appellant argued formula prescribed post 1.4.2011 to be used
for pre 1.4.2011 i.e. margin based instead of total sales value
since margin indicates value addition
11th January 2017
since margin indicates value addition
Department’s contention - common service credit attributable
to trading to be based on total sales value of trading and not
margin based.
since margin indicates value addition
Department’s contention - common service credit attributable
to trading to be based on total sales value of trading and not
margin based.A. R. Krishnan & Co.49
In the words of the Tribunal
“We do not find that for apportioning the service tax credit
of common services used between the dutiable
f t d d d t d d d th V l dditi
In the words of the Tribunal
“We do not find that for apportioning the service tax credit
of common services used between the dutiable
f t d d d t d d d th V l dditimanufactured goods and traded goods the Value addition
of traded goods has any relevance. The formula
prescribed for the period after 01.04.2011 does not
provide reasonable estimate of the credit attributable to
the exempted and dutiable activities Futhermore the
manufactured goods and traded goods the Value addition
of traded goods has any relevance. The formula
prescribed for the period after 01.04.2011 does not
provide reasonable estimate of the credit attributable to
the exempted and dutiable activities Futhermore the
11th January 2017
the exempted and dutiable activities. Futhermore, the
formula sought to be adopted by the appellants is not the
formula prescribed for the period after 01.04.2011”
the exempted and dutiable activities. Futhermore, the
formula sought to be adopted by the appellants is not the
formula prescribed for the period after 01.04.2011”
A. R. Krishnan & Co.50
22 2626
Tribunal concurred with department based mainly on following
arguments –
• Formula [Margin based] not suitable since if value of trading is based
on value addition / margin then value of manufactured goods also
h ld b l ‘ ’ / l dd f l
Tribunal concurred with department based mainly on following
arguments –
• Formula [Margin based] not suitable since if value of trading is based
on value addition / margin then value of manufactured goods also
h ld b l ‘ ’ / l dd f lshould be only ‘margin’ / value addition – say Manufacturing value
minus cost of raw materials. [Para 4.15(a) and (b)]
• Appellant’s argument that the post 1.4.2011 formula has to be
applied only on common input service credit at depots is incorrect
- the factory input service also needs to be considered. [Para 4.15
should be only ‘margin’ / value addition – say Manufacturing value
minus cost of raw materials. [Para 4.15(a) and (b)]
• Appellant’s argument that the post 1.4.2011 formula has to be
applied only on common input service credit at depots is incorrect
- the factory input service also needs to be considered. [Para 4.15
11th January 2017
(c)]
• If the reversal is only in respect of common credit at depots, sales
value is a fair formula for apportioning since most of the services
cost on the basis of the value or volume or weight or turnover.
(c)]
• If the reversal is only in respect of common credit at depots, sales
value is a fair formula for apportioning since most of the services
cost on the basis of the value or volume or weight or turnover.A. R. Krishnan & Co.51
As regards Tribunal’s contention that total cenvat credit to be
considered and not common the following points to be noted:
As regards Tribunal’s contention that total cenvat credit to be
considered and not common the following points to be noted:
• That was not the issue under consideration.
• The observation that “Total cenvat credit” and not merely
“common cenvat credit” is to be taken for reversal is an
‘obiter’ [a passing observation]. It was not considered
l t t t l i H it t h
• That was not the issue under consideration.
• The observation that “Total cenvat credit” and not merely
“common cenvat credit” is to be taken for reversal is an
‘obiter’ [a passing observation]. It was not considered
l t t t l i H it t h
11th January 2017
relevant to come to a conclusion. Hence, it may not have
precedential value.
relevant to come to a conclusion. Hence, it may not have
precedential value.
A. R. Krishnan & Co.52
22 2727
Jawahar SSK Ltd. v. CCE, (2016) 46 STR 396 (Tri. – Mum.)
FACTS
Appellant manufacturer of sugar / molasses
Jawahar SSK Ltd. v. CCE, (2016) 46 STR 396 (Tri. – Mum.)
FACTS
Appellant manufacturer of sugar / molassespp g
Generated electricity from baggase (non-excisable goods)
-Partly for captive use; partly sold to MSEB
No separate accounts of input / input services for captive
use and sales
pp g
Generated electricity from baggase (non-excisable goods)
-Partly for captive use; partly sold to MSEB
No separate accounts of input / input services for captive
use and sales
11th January 2017
use and sales
Revenue demanded 10 / 5% of MSEB sales u/r. 6(3)
use and sales
Revenue demanded 10 / 5% of MSEB sales u/r. 6(3)
A. R. Krishnan & Co.53
Tribunal held –
• Since baggase is non-excisable demand u/r. 6(3) not
sustainable since Rule 6 applies only to dutiable and
exempted goods.
Tribunal held –
• Since baggase is non-excisable demand u/r. 6(3) not
sustainable since Rule 6 applies only to dutiable and
exempted goods.
• Cenvat credit reversible on input / input services to the
extent used in generation of electricity sold to MSEB.
• Tribunal identified common inputs / input services used for
generation of electricity (captively used and sold) and
• Cenvat credit reversible on input / input services to the
extent used in generation of electricity sold to MSEB.
• Tribunal identified common inputs / input services used for
generation of electricity (captively used and sold) and
11th January 2017
directed reversal of credit only to the extent used for
generation of electricity sold.
Comment: Advances the concept that reversal to be done only of
common credit when Rule 6(3) not applicable.
directed reversal of credit only to the extent used for
generation of electricity sold.
Comment: Advances the concept that reversal to be done only of
common credit when Rule 6(3) not applicable.A. R. Krishnan & Co.54
22 2828
“Total Cenvat Credit Taken” – whether includes input services excl. for taxable services or only common input services ?
Two ViewsTwo Views
Lit l P i Literal Interpretation
“Total Cenvat Credit Taken” includes inputs excl. for taxable services
Purposive Construction
• R. 6(2) which deals only with separate recordsfor common inputs [Cir. 754 dtd. 9.10.03 &Eicher Tractors v. CCE (2000)116 ELT 712 ]. R.6(3) which is an option to r. 6(2) must also beinterpreted as applicable only for common
11th January 2017 A. R. Krishnan & Co.
services. inputs.
• Rule 6(3)(ii) - purpose to exclude creditattributable to “exempt” service
Good case inputs excl. for taxable services would not be subject to proportionate option
55
RULE 6
Reversal / payment on account of cenvat credit attributable to exempted service - present broad position w.e.f. 1.4.2016
RULE 6
Reversal / payment on account of cenvat credit attributable to exempted service - present broad position w.e.f. 1.4.2016 No credit allowed on input/input services used exclusively for exempt
services [ES].
Full credit on input / input service [FC] used exclusively for taxable services
No credit allowed on input/input services used exclusively for exemptservices [ES].
Full credit on input / input service [FC] used exclusively for taxable services[TS] allowed.
Common Credit (“CC”) for TS and ES –
Avail entire credit but pay specified % of exempt turnover [ET] subject tomax. of total credit taken [“% option”]
Reduce CC proportionately i.e. in ratio of exempt / total turnover [TT]and avail balance [“proportionate option”]
[TS] allowed.
Common Credit (“CC”) for TS and ES –
Avail entire credit but pay specified % of exempt turnover [ET] subject tomax. of total credit taken [“% option”]
Reduce CC proportionately i.e. in ratio of exempt / total turnover [TT]and avail balance [“proportionate option”]
N.B. When the provisions were introduced w.e.f. 01.04.2016 CBEC stated“……. (new provision) being drafted with the objective of simplifying andrationalizing the same without altering the established principles ofreversal of such credit”
N.B. When the provisions were introduced w.e.f. 01.04.2016 CBEC stated“……. (new provision) being drafted with the objective of simplifying andrationalizing the same without altering the established principles ofreversal of such credit”
11th January 2017 56 A. R. Krishnan & Co.
22 2929
• Whether proportionate method allowed if option p p p
not exercised?
• If option not exercised, whether % option on ET
can be collected irrespective of amount of credit ?
11th January 2017 57 A. R. Krishnan & Co.
Tata technologies Ltd. v. CCE, (2016) 42 STR 290 (Tri. – Mum.)
FACTS• Assessee providing taxable and exempt services for April –
September, 2008.
FACTS• Assessee providing taxable and exempt services for April –
September, 2008.September, 2008.
• ‘Proportionate option’ exercised after F.Y. and intimated on7.5.2009 [Credit reversed – Rs. 5,06,736/-]
• Revenue demanded 8% of exempt service [Rs. 1,62,52,969/-]since intimation of proportionate option –
September, 2008.
• ‘Proportionate option’ exercised after F.Y. and intimated on7.5.2009 [Credit reversed – Rs. 5,06,736/-]
• Revenue demanded 8% of exempt service [Rs. 1,62,52,969/-]since intimation of proportionate option –
11th January 2017
Mandatory;
Filed belatedly and not before exercising option;
Exercising the option belatedly amounts not exercising theoption.
Mandatory;
Filed belatedly and not before exercising option;
Exercising the option belatedly amounts not exercising theoption.
A. R. Krishnan & Co.58
22 3030
TRIBUNAL HELD
Condition of filing declaration only directory not mandatory
Most details available with department
TRIBUNAL HELD
Condition of filing declaration only directory not mandatory
Most details available with department
Rule 6 cannot be used as tool of oppression to extract theamount which is much beyond the remedial measure and whatcannot be collected directly, cannot be collected indirectly, aswell
substantive compliance made by the assessee i e calculation of
Rule 6 cannot be used as tool of oppression to extract theamount which is much beyond the remedial measure and whatcannot be collected directly, cannot be collected indirectly, aswell
substantive compliance made by the assessee i e calculation of
11th January 2017
substantive compliance made by the assessee i.e. calculation ofthe amount of CENVAT Credit reversible on annual basis andpayment of the amount before the prescribed date (30TH June).Hence substantial benefit cannot be denied.
substantive compliance made by the assessee i.e. calculation ofthe amount of CENVAT Credit reversible on annual basis andpayment of the amount before the prescribed date (30TH June).Hence substantial benefit cannot be denied.
A. R. Krishnan & Co.59
In the garb of Rule 6, the provisions of Section 93 of the
Finance Act, 1994 cannot be overridden and/or the
exemption provided under the Section 93 of the Finance Act,
1994 cannot be negated by the Cenvat Credit Rules which is1994 cannot be negated by the Cenvat Credit Rules, which is
a delegated legislation and subservient to the main Act.
Hence demand set aside
In Aster Pvt. Ltd. v. CCE (2016) 43 STR 411 (Tri. –
11th January 2017
Hyd.) the Tribunal held failure to intimate does not
result in losing choice of proportionate option.
A. R. Krishnan & Co.60
22 3131
OTHER IMPORTANT CASE LAWS ON CENVAT
CREDIT
OTHER IMPORTANT CASE LAWS ON CENVAT
CREDIT
11th January 2017 A. R. Krishnan & Co.61
Rs.
Towards media charges (Gross spend) 100.00
Less: Discount @ 15% 15.00
Net Chargeable 85.00
BILL RAISED BY MEDIA ON AGENCY (Also name of advertiser mentioned)
Zapak Digital Entertainment Ltd. v. CST, 2016-TIOL-3323-CESTAT-MUM
g
Add: Service tax@ 15% 12.75
TOTAL 97.75
BILL RAISED BY AGENCY (On Advertiser)
Reimbursement of media cost Rs.
Broadcaster’s Value 85.00
Add: Broadcaster’s Service tax @ 15% 12 75
11th January 2017 A. R. Krishnan & Co.62
Add: Broadcaster s Service tax @ 15% 12.75
TOTAL - A 97.75
Ad. agency commission, say, 2.5% of Rs.100/- 2.50
Service tax on Ag. commission @15% 0.38
TOTAL – B 2.88
TOTAL (A+B) 100.63
22 3232
• Agency pays broadcaster. Thereafter advertiser
reimburses agency.
ISSUE
• Agency pays broadcaster. Thereafter advertiser
reimburses agency.
ISSUEISSUE
Whether advertiser entitled to take credit of Rs. 12.75
(broadcaster’s service tax)
Revenue denied credit contending –
ISSUE
Whether advertiser entitled to take credit of Rs. 12.75
(broadcaster’s service tax)
Revenue denied credit contending –
11th January 2017
• Broadcaster’s services input services for ad agency
• Invoice of broadcaster not on advertiser but on ad
agency.
• Broadcaster’s services input services for ad agency
• Invoice of broadcaster not on advertiser but on ad
agency.
A. R. Krishnan & Co.63
Tribunal allowed credit and held –
• Agencies by definition work on behalf of their client.
• Advertising agency has engaged the broadcaster for the
purpose of advertisement and has merely acted as a conduit
Tribunal allowed credit and held –
• Agencies by definition work on behalf of their client.
• Advertising agency has engaged the broadcaster for the
purpose of advertisement and has merely acted as a conduit
for transfer of money from the advertiser to the
broadcaster.
• The invoices of the broadcaster clearly show the name of
advertiser as Zapak Digital Entertainment Ltd and name of
for transfer of money from the advertiser to the
broadcaster.
• The invoices of the broadcaster clearly show the name of
advertiser as Zapak Digital Entertainment Ltd and name of
11th January 2017
the advertising agency is mentioned and is an agent in the
said invoice.
• Invoices of the broadcaster is issued in the name of
advertiser.
the advertising agency is mentioned and is an agent in the
said invoice.
• Invoices of the broadcaster is issued in the name of
advertiser.A. R. Krishnan & Co.64
22 3333
Vamona Developers Pvt. Ltd. v. CCCE & ST, (2016) 42 STR 277 (Tri. – Mum.)
FACTS Assessee constructed a mall and registered under construction
Vamona Developers Pvt. Ltd. v. CCCE & ST, (2016) 42 STR 277 (Tri. – Mum.)
FACTS Assessee constructed a mall and registered under construction
and renting services in 2011
It sold 20% of constructed area
It availed 80% credit on input services and capital goods used
for construction of mall for the period June,2007 to
and renting services in 2011
It sold 20% of constructed area
It availed 80% credit on input services and capital goods used
for construction of mall for the period June,2007 to
11th January 2017
March,2011
Revenue denied credit since the services have only resulted in
an immoveable property which is neither excisable nor service
taxable.
March,2011
Revenue denied credit since the services have only resulted in
an immoveable property which is neither excisable nor service
taxable.A. R. Krishnan & Co.65
Tribunal held –
• The appellant had declared their intention of availing credit on
input services for discharging the service tax liability on renting
the units in the mall in 2011. There is no prohibition or restriction
on taking pre registration credit i e prior to 2011
Tribunal held –
• The appellant had declared their intention of availing credit on
input services for discharging the service tax liability on renting
the units in the mall in 2011. There is no prohibition or restriction
on taking pre registration credit i e prior to 2011on taking pre-registration credit. i.e prior to 2011
Differentiating the decision in Bharti Airtel Ltd. v. CCE (2014) 35 STR
865 (Bom.) and relying on –
• CCE v. Sai Samhita Storages, (2011) 23 STR 341 (AP)
• CCE v. Navaratna S.G.Highway prop. Pvt. Ltd., (2012) 28 STR
on taking pre-registration credit. i.e prior to 2011
Differentiating the decision in Bharti Airtel Ltd. v. CCE (2014) 35 STR
865 (Bom.) and relying on –
• CCE v. Sai Samhita Storages, (2011) 23 STR 341 (AP)
• CCE v. Navaratna S.G.Highway prop. Pvt. Ltd., (2012) 28 STR
11th January 2017
166 (Tri. – Ahmd.)
• Mundra Ports & SEZ Ltd. v. CCE, (2015) 39 STR 726 (Guj.)
Tribunal held credit allowable [ratio being without the immovable
property renting services (taxable) cannot be rendered]
166 (Tri. – Ahmd.)
• Mundra Ports & SEZ Ltd. v. CCE, (2015) 39 STR 726 (Guj.)
Tribunal held credit allowable [ratio being without the immovable
property renting services (taxable) cannot be rendered]A. R. Krishnan & Co.66
22 3434
The credit was allowed under cl. (i) of rule 2(l) i.e.
‘any service used for providing an output service’
The credit was allowed under cl. (i) of rule 2(l) i.e.
‘any service used for providing an output service’
Tribunal also observed, pre 1.4.2011 services used for
“setting up” of premises was allowed as input service.
Post 1.4.2011, the words “setting up” was deleted.
Hence cenvat credit on input services used for
Tribunal also observed, pre 1.4.2011 services used for
“setting up” of premises was allowed as input service.
Post 1.4.2011, the words “setting up” was deleted.
Hence cenvat credit on input services used for
11th January 2017
p
construction of mall is eligible.
p
construction of mall is eligible.
A. R. Krishnan & Co.67
Reliance Industries Ltd. v. CCE, (2016) 45 STR 383 (Tri. –
Mum.)
Post 1 4 2011 credit on services [e g outdoor catering health
Reliance Industries Ltd. v. CCE, (2016) 45 STR 383 (Tri. –
Mum.)
Post 1 4 2011 credit on services [e g outdoor catering health Post 1.4.2011, credit on services [e.g. outdoor catering, health
and fitness, etc.] used primarily for personal use or
consumption of an employee was not allowed. However,
Tribunal on facts found that outdoor catering services, club or
Association services and health and fitness services was
Post 1.4.2011, credit on services [e.g. outdoor catering, health
and fitness, etc.] used primarily for personal use or
consumption of an employee was not allowed. However,
Tribunal on facts found that outdoor catering services, club or
Association services and health and fitness services was
11th January 2017
utilized for business activity and hence allowed cenvat credit.utilized for business activity and hence allowed cenvat credit.
A. R. Krishnan & Co.68
22 3535
Essar Steel India Ltd. v. CCE & ST, (2016) 42 STR 869 (Tri. –
Ahmd.)
In CCE v. Cadila Healthcare Ltd. (2013) 30 STR 3 (Guj.), the
Gujarat High Court held that cenvat credit on commission paid to
Essar Steel India Ltd. v. CCE & ST, (2016) 42 STR 869 (Tri. –
Ahmd.)
In CCE v. Cadila Healthcare Ltd. (2013) 30 STR 3 (Guj.), the
Gujarat High Court held that cenvat credit on commission paid toGujarat High Court held that cenvat credit on commission paid to
foreign agents (sales promotion) is not allowable.
Explanation inserted to definition of input service w.e.f. 3.2.2016
“Explanation - For the purpose of this clause, sales promotion
includes services by way of sale of dutiable goods on
Gujarat High Court held that cenvat credit on commission paid to
foreign agents (sales promotion) is not allowable.
Explanation inserted to definition of input service w.e.f. 3.2.2016
“Explanation - For the purpose of this clause, sales promotion
includes services by way of sale of dutiable goods on
11th January 2017
commission basis.”
Tribunal held that the explanation would have a retrospective
effect and allowed cenvat credit on commission paid to foreign
agents
commission basis.”
Tribunal held that the explanation would have a retrospective
effect and allowed cenvat credit on commission paid to foreign
agents A. R. Krishnan & Co.69
COST SHARING ARRANGEMENTS
Gujarat State Fertilizer & chemicals (GSFC) [2016-TIOL-198-SC-ST]
Mormugao Post Trust (MPT) [2016-TIOL-2843-CESTAT-MUM]
Reliance ADA Group Pvt. Ltd. [(2016) 43 STR 372 (Tri.Mum)]
11th January 2017 A. R. Krishnan & Co.70
Franco Indian Pharmaceutical (P) Ltd. [FIPPL] [(2016) 42 STR 1057 (Tri-Mum)]
22 3636
Gujarat State Fertilizer & chemicals (GSFC)2016-TIOL-198-SC-ST
FACTSReliance Industries supplies
HCN in pipelineIntermittent
hold tank with
•• Quantity of HCL received consumed in ratio of 60:40Quantity of HCL received consumed in ratio of 60:40
Incineration Charges 100
GACL Plant40%
hold tank withincineration
facility at GSFCpremises
GSFC Plant60%
•• Quantity of HCL received consumed in ratio of 60:40Quantity of HCL received consumed in ratio of 60:40
•• Both the parties contributed investment tank for developing facility at GSFC premisesBoth the parties contributed investment tank for developing facility at GSFC premises
•• Necessitated since it has to be used immediately both together could consume the Necessitated since it has to be used immediately both together could consume the
threshold supplythreshold supply
•• Arrangement between parties to share operative expenditure 50:50Arrangement between parties to share operative expenditure 50:5011th January 2017 71 A. R. Krishnan & Co.
Revenue’s ContentionRevenue’s Contention•• StorageStorage // holdingholding tanktank isis ‘storage‘storage facility’facility’
•• 5050%% shareshare paidpaid byby GACLGACL toto GSFCGSFC isis towardstowards ‘storage‘storage &&
warehousingwarehousing services’services’ liableliable u/su/s 6565((105105)()(zzazza))
Assessee’s ContentionAssessee’s Contention
•• On facts no storage and warehousing services providedOn facts no storage and warehousing services provided
•• StorageStorage tanktank notnot aa storagestorage facilityfacility -- onon safetysafety groundsgrounds storagestorage
ofof chemicalschemicals notnot permissiblepermissible chemicalschemicals receivedreceived inin oneone tanktank
11th January 2017 A. R. Krishnan & Co.72
ofof chemicalschemicals notnot permissiblepermissible –– chemicalschemicals receivedreceived inin oneone tanktank
onlyonly forfor convenienceconvenience purposepurpose
•• AmountsAmounts receivedreceived fromfrom GACLGACL waswas onlyonly shareshare ofof expensesexpenses asas
agreedagreed uponupon notnot towardstowards supplysupply ofof serviceservice..
22 3737
• For installation of facilities both parties contributed towards investment.
• Since handling facilities are in premises of GSFC, incineration also takes place
at GSFC’s premises.
Supreme Court held
• Handling facilities expenditure thereof is shared equally by both the parties as
per the agreement / arrangement.
• Based on facts handling portion and maintenance of facility in the nature of
‘Joint Venture’
• Payment by GACL to GSFC – towards share of expenditure incurred
• GSFC cannot be said to have provided service to GACL
11th January 2017 A. R. Krishnan & Co.73
• GSFC cannot be said to have provided service to GACL
• Service Tax demand under Storage and Warehouse services not sustainable.
• The question whether receiving of HCN through the said common pipeline in
the tank which is setup by the GFSC and GACL amounts to ‘storage’ was left
open.
Mormugao Post Trust (MPT) 2016-TIOL-2843-CESTAT-MUM
Agreement b/w MPT & SWPL whereby bids were invited in line with the Governments
policy of encouraging Private participation in the port sector through the Public Private
Partnership route (PPP for short)
MPT leased out land & water-front area to SWPL for license fees
SWPL constructs and operates two multi-purpose bulk cargo handling berths
MPT gives permission to conduct exclusive port operation
MPT maintenances general port infrastructure, pilotage, overseeing dock safety,
monitoring air and water pollution & scheduling entry berthing & sailing of vessel
etc.,
11th January 2017 A. R. Krishnan & Co.74
,
MPT earns-
• License fees on which it pays ST under renting of immovable property services
• Royalty @18% being share of revenue earned towards cargo handling charges – no
ST paid – treated as share in Joint Venture
22 3838
• Assessee & SWPL were jointly rendering port services & earning profit.
The relationship between them was that of a J/V & not that of a SP and
SR
• Activity undertaken by assessee for the venture was for his own benefit
Assessee Contention
Activity undertaken by assessee for the venture was for his own benefit
& there was no quid-pro-quo between them
• Capital contribution to J/V – transaction in money not liable [Reliance
on CBEC Circular 4179/5/2014 dated 24.9.14] So logically return on /
of capital from venture being transaction in money also not liable.
Department’s Contention
11th January 2017 A. R. Krishnan & Co.75
Department s Contention
• Cl. in agreement – obligation & liabilities not jointly / collective – no
partnership created
• Appellant does not bear any loss in J/V
Tribunal’s finding• On facts of the case royalty earned a reward for contribution of
grant of permission to conduct port business using water-front
Several services which it was statutorily obliged to provide to SWPL &
port usersport users
• Arrangement b/w assessee & SWPL is a ‘PPP’ in the nature of J/V – the
agreement evidenced a joint conduct over the operations
• Activity carried out by assessee for the venture cannot be said to be in the
nature of service as what it does is only to advance its own interest. There
is no intention to render service & there is no quid-pro-quo for such service
11th January 2017 A. R. Krishnan & Co.76
is no intention to render service & there is no quid pro quo for such service
accordingly such activities cannot be taxed.
• There being no estoppel in law the fact that the appellant started paying
tax on royalty after 1.7.2012 would not be relevant for determining liabilty
of past period
22 3939
• What the partner/co-venture does is for his own benefit
cannot ipso facto be considered as a service rendered to
the partnership (joint venture)
• The mere fact that the partnership (joint venture) mayThe mere fact that the partnership (joint venture) may
also benefit from the same is irrelevant as there is no
contract of service agreed upon or performed by the
partner (co-venturer) to the partnership (joint venture)
• There was no consideration agreed upon or provided
11th January 2017 A. R. Krishnan & Co.77
g p p
• Transaction b/w coventurer & J/V are governed by
partnership law - no stipulation in partnership law that
partner must necessarily share losses.
Reliance ADA Group Pvt. Ltd. (2016) 43 STR 372 (Tri.Mum)
Aircraft hiring service
Branding Services
Professional services
Custodianservices
RADAG
Aircraft hiring
i
Branding Services
Professional services
Custodianservices
11th January 2017 A. R. Krishnan & Co.78
service Se ces se ces se ces
R1 R2
22 4040
Cost Sharing Arrangement• CSA between RADAG - R1 & R2 – Purpose - Cost benefit
to group – by minimizing overall operational cost
• RADAG pays for the services and recovers the actual cost
from R1 & R2 in the ratio of estimated use of services by
them. Nothing more is recovered. No profit or loss.
ISSUE
11th January 2017 A. R. Krishnan & Co.79
• Are the payments a pure pass through or does RADAG
provide a ‘business Support services’ to the group Cos.,
R1 & R2
Findings of Tribunal• On facts, RADAG held to be a manager / trustee to procure service
on behalf of group entities. It carries out agency function of
procurement of services for participating group Cos. which share cost
& th& expenses thereon
• Amounts received are towards reimbursement of cost / expenses
incurred & not consideration for providing any service
• Perse it has not provided any specified service to participating group
Cos.
11th January 2017 A. R. Krishnan & Co.80
• Pure agent conditions prescribed u/r. 5(2) of Valuation Rules also
satisfied.
• Amounts recovered only towards actual cost – nothing more
SINCE NO TAXABLE SERVICE PROVIDED ST DEMAND NOT SUSTAINABLE
22 4141
• Reliance on following decisions
Tata Technologies Ltd. v. CCE (2007) 8 STR 358 (Tri.-
Mum.) - Tripartite agreement among TTL, Group entities and
SAP India. TTL only collected licence and maintenance fees
from group entities and paid to SAP India - TTL acted as a
payment conduit – No provision of service by TTL to group
entities
JM Financial Services Pvt. Ltd. Vs. CST 2014 (36) STR
151 (T i M ) th i b t f
11th January 2017 A. R. Krishnan & Co.81
151 (Tri – Mum) – the reimbursement of common expenses
[mainly electricity] received from the group entities is against
their share of expenses and held there was no provision of
service
Franco Indian Pharmaceutical (P) Ltd. [FIPPL] (2016) 42 STR 1057 (Tri-Mum)[Manufacturers of Pharmaceuticals products having a marketing network]
Group Co. 1
•• Lending services of employees for marketing of goods to Group Co’s.Lending services of employees for marketing of goods to Group Co’s.
FIPPL Group Co. 2
Group Co. 3E1 E2 E3 E4
•• Expenses incurred on employee recovered as percentage of value of sale madeExpenses incurred on employee recovered as percentage of value of sale made
Issue WhetherWhether assesseeassessee isis providingproviding BASBAS (promotion(promotion && makingmaking ofof goodsgoods belongingbelonging
toto GroupGroup co’s)co’s) andand thethe expensesexpenses recoveredrecovered cancan bebe saidsaid toto bebe aa considerationconsideration
forfor suchsuch servicesservices11th January 2017 82 A. R. Krishnan & Co.
22 4242
Recovery from Group Co’s. not liable under BAS•• AppellantsAppellants employeesemployees areare sentsent onon deputationdeputation toto groupgroup CosCos.. &&
deputeddeputed employeeemployee areare governedgoverned byby rules,rules, termsterms && conditionsconditions ofof
Tribunal Decision (Main reasoning)
deputeddeputed employeeemployee areare governedgoverned byby rules,rules, termsterms && conditionsconditions ofof
saidsaid groupgroup CosCos..
•• SaleSale effectedeffected byby employeesemployees areare consideredconsidered asas salesale byby groupgroup CosCos..
•• AfterAfter completioncompletion ofof jobjob employeesemployees areare deputeddeputed backback toto appellantappellant
•• RelianceReliance onon KK.. RahejaRaheja RealReal EstateEstate ServicesServices.. FinalFinal orderorder NoNo..
11th January 2017 A. R. Krishnan & Co.83
A/A/10481048//20132013 dateddated 1010..44..1313 –– wherewhere assesseeassessee startedstarted payingpaying
underunder BSSBSS fromfrom 11//55//20062006 butbut contestedcontested classificationclassification underunder
BAS]BAS]
Tribunal Decision (Alternate reasoning) •• EmploymentEmployment servicesservices outsideoutside ambitambit ofof STST prepre andand postpost ((--veve)) listlist
•• SigningSigning ofof employmentemployment letterletter jointlyjointly byby allall CosCos.. oror byby oneone ofof themthem andand lendinglending
thethe employeesemployees toto othersothers wouldwould notnot makemake aa differencedifference toto thethe taxabilitytaxability ofof
employmentemployment contractcontract
•• IfIf employmentemployment contractcontract silentsilent –– employeeemployee cancan refuserefuse toto workwork onon deputationdeputation //
secondmentsecondment.. HoweverHowever ifif hehe consentsconsents toto deputationdeputation // secondmentsecondment knowingknowing thatthat
hishis emolumentsemoluments areare paidpaid byby secondedseconded CoCo.. byby virtuevirtue ofof conductconduct ofof partiesparties itit
transformstransforms intointo jointjoint employmentemployment withwith severalseveral employersemployers [Referred[Referred toto DraftDraft
CircularCircular dateddated 2727..77..20122012 onon JointJoint employment]employment]
11th January 2017 A. R. Krishnan & Co.84
•• AbsenceAbsence ofof markupmarkup // marginmargin inin paymentspayments receivedreceived -- doesdoes notnot partakepartake charactercharacter
ofof considerationconsideration butbut aa purepure reimbursementreimbursement ofof costcost..
HENCEHENCE RECOVERYRECOVERY FROMFROM GROUPGROUP COSCOS.. TOWARDSTOWARDS EMPLOYEEEMPLOYEE DEPUTATIONDEPUTATION NOTNOT
LIABLELIABLE FORFOR SERVICESERVICE TAXTAX..
22 4343
MISCELLANEOUS CASE LAWS
N Bala Baskar v UOI [(2016) 43 STR 161 (Mad )] N. Bala Baskar v. UOI [(2016) 43 STR 161 (Mad.)]
Sumeet C. Tholle & Pratima S. Tholle v. CCE [(2016) 43
STR 110 (Tri.- Mum)]
Magarpatta Township Dev. & Construction Co. Ltd.
[(2016) 43 STR 132 (Tri.- Mum)]
11th January 2017 A. R. Krishnan & Co.85
[(2016) 43 STR 132 (Tri. Mum)]
N. Bala Baskar v. UOI(2016) 43 STR 161 (Mad.)
Maintainability of Writ Petition PetitionerPetitioner hadhad enteredentered intointo aa developmentdevelopment agreementagreement withwith developerdeveloper inin
respectrespect ofof aa plotplot ofof landland ownedowned byby himhim alongwithalongwith hishis siblingssiblings forfor
developmentdevelopment ofof aa landland intointo residentialresidential housinghousing complexcomplex wherebywhereby 6565%% ofof
constructedconstructed areaarea waswas toto bebe handedhanded overover toto thethe appellantappellant && hishis siblingssiblings &&
remainingremaining 3535%% alongwithalongwith undividedundivided shareshare inin landland waswas toto bebe takentaken overover byby
developerdeveloper..
UnderUnder thethe agreementagreement eacheach partyparty hadhad agreedagreed toto bearbear thethe respectiverespective serviceservice
11th January 2017 A. R. Krishnan & Co.86
taxtax && VATVAT liabilityliability pertainingpertaining toto itsits portionportion
SubsequentlySubsequently hehe filedfiled aa writwrit challengingchallenging thethe viresvires ofof BoardBoard CircularCircular NoNo..
151151//22//20122012 dateddated 1010..0202..20122012 basedbased onon whichwhich thethe developerdeveloper chargedcharged STST onon
thethe 6565%% ofof thethe constructedconstructed areaarea toto thethe petitionerpetitioner
22 4444
High Court’s Observation
HCHC dismisseddismissed thethe WPWP holdingholding petitionerpetitioner beingbeing aa personperson toto whomwhom thethe burdenburden ofof taxtax isis
ultimatelyultimately passedpassed onon hashas nono locuslocus standistandi toto challengechallenge aa levylevy && hencehence thethe writwrit filedfiled byby
thethe appellantappellant toto declaredeclare thethe circularcircular asas ultraultra viresvires waswas notnot maintainablemaintainable..
The contention that the person to whom the burden of tax is ultimately passed on is The contention that the person, to whom the burden of tax is ultimately passed on, is
entitled to challenge a levy, if accepted, would lead to disastrous consequences. Any
increase in the incidence of sales tax affects all consumers of all products. Therefore,
any person will be entitled to come and challenge the increase in the levy on the ground
that the manufacturer or dealer will eventually pass on the burden only to the ultimate
consumer. We can quote any number of examples of this nature. Every citizen is a
11th January 2017 A. R. Krishnan & Co.87
consumer of any number of products. Every Finance Act imposes an additional burden
upon many such products. Millions of consumers are entitled to come and challenge
such levies, if such a contention is accepted. Therefore, we are of the considered view
that the petitioner has no locus standi to challenge the above circulars.
High Court’s Observation
ToTo petitioner’spetitioner’s contentioncontention thatthat thethe transactiontransaction waswas onlyonly anan
exchangeexchange // transfertransfer ofof immovableimmovable propertyproperty thethe HCHC heldheld thatthat
effectivelyeffectively thethe developerdeveloper hashas providedprovided constructionconstruction servicesservices toto
SLPSLP againstagainst thethe aboveabove decisiondecision beforebefore SCSC dismisseddismissed byby
thethe petitionerpetitioner // landownerlandowner
AccordinglyAccordingly thethe writwrit petitionpetition waswas dismisseddismissed
11th January 2017 A. R. Krishnan & Co.88
thethe SCSC.. HoweverHowever SCSC observedobserved petitionerpetitioner entitledentitled forfor
refundrefund ifif permissiblepermissible byby lawlaw [[20162016--TIOLTIOL--225225--SCSC--ST]ST]
22 4545
Sumeet C. Tholle & Pratima S. Tholle v. CCE(2016) 43 STR 110 (Tri.- Mum)
FactsFacts ProcuresProcures aa 33 storiedstoried bungalowbungalow alongwithalongwith proportionateproportionate undividedundivided
interestinterest inin commoncommon areaarea andand facilitiesfacilities videvide salesale deeddeed dateddated3131 1212 201320133131..1212..20132013
ServiceService taxtax collectedcollected byby thethe developerdeveloper fromfrom thethe appellantappellant.. RefundRefund claimclaim filedfiled byby thethe appellantappellant rejectedrejected byby thethe RevenueRevenue onon
thethe followingfollowing groundsgrounds.. ProofProof ofof taxtax depositeddeposited withwith thethe govtgovt.. byby thethe developerdeveloper waswas notnot
furnishedfurnished
11th January 2017 A. R. Krishnan & Co.89
PlanPlan ofof househouse showedshowed thatthat withwith minorminor alterationalteration itit couldcould bebemademade intointo 33 unitsunits
ProjectProject ofof vendorvendor waswas notnot restrictedrestricted toto appellant’sappellant’s unitunit butbut totoaa largerlarger complexcomplex ofof whichwhich thethe unitunit waswas onlyonly aa partpart..
Tribunal’s Findings & Conclusion
ApplicantApplicant ofof refundrefund cancan onlyonly establishestablish taxtax hashas beenbeen
includedincluded inin amountsamounts mademade overover toto suppliersupplier –– evidenceevidence ofof
tt ff tt tt thth lili ii ditiditi ffpaymentpayment ofof taxtax toto thethe suppliersupplier isis necessarynecessary conditioncondition forfor
refundrefund butbut notnot evidenceevidence ofof depositdeposit ofof suchsuch taxtax..
TheThe planplan ofof thethe house,house, determinationdetermination ofof size,size, nono.. ofof doorsdoors oror itsits
potentialpotential adaptabilityadaptability inin futurefuture doesdoes notnot determinedetermine thethe coveragecoverage
underunder thethe definitiondefinition ofof ‘single‘single residentialresidential unit’unit’ asas defineddefined inin NotfNotf
11th January 2017 A. R. Krishnan & Co.90
underunder thethe definitiondefinition ofof ‘single‘single residentialresidential unit’unit’ asas defineddefined inin NotfNotf..
2525//20122012--STST dateddated 2020..0606..20122012.. Hence,Hence, rejectionrejection ofof applicant’sapplicant’s
claimclaim thatthat thethe transactiontransaction wouldwould bebe coveredcovered underunder entryentry 1414 ofof
aboveabove NotfNotf.. onon aboveabove groundsgrounds isis incorrectincorrect..
22 4646
DismissalDismissal ofof thethe refundrefund claimclaim byby relyingrelying onon definitiondefinition ofofss..6565((105105)()(zzzhzzzh)) && 6565((9191a)a) isis notnot legallylegally sustainablesustainable [since[since issueissuepertainspertains toto postpost negativenegative list]list].. TheThe wisdomwisdom ofof erstwhileerstwhile legislationlegislationmaymay undeniablyundeniably provideprovide insightsinsights toto prevailingprevailing legallegal provisionprovision butbutrecourserecourse toto thatthat erstwhileerstwhile statutestatute toto refuterefute contentioncontention ofofdisputantdisputant isis withoutwithout authorityauthority ofof lawlaw..pp yy
TheThe transactiontransaction betweenbetween applicantapplicant && thethe developerdeveloper isis notnotsatisfyingsatisfying conditioncondition forfor exclusionexclusion fromfrom thethe declareddeclared serviceservice [in[inrespectrespect ofof nono paymentspayments beforebefore completioncompletion certificate]certificate] oror forforinclusioninclusion underunder EntryEntry 1414 ofof NotfNotf.. 2525//20122012--STST dateddated 2020..0606..20122012(single(single unit)unit).. However,However, sincesince underunder thethe agreementagreement vendorvendorhadhad onlyonly renouncedrenounced allall rightsrights inin thethe propertyproperty thatthat waswas
11th January 2017 A. R. Krishnan & Co.91
yy gg p p yp p ytransferred,transferred, thethe transactiontransaction waswas forfor transfertransfer ofof immovableimmovablepropertyproperty byby wayway ofof salesale && hencehence excludedexcluded fromfrom ambitambit ofofdefinitiondefinition ofof ‘service’‘service’ asas defineddefined inin ss.. 6565B(B(4444)) && hencehence notnotliableliable forfor STST..
AccordinglyAccordingly thethe refundrefund claimclaim waswas admissibleadmissible..
Magarpatta Township Dev. & Construction Co. Ltd.(2016) 43 STR 132 (Tri.- Mum)
ServicesServices ofof ForeignForeign ArchitectArchitect availedavailed forfor designingdesigning andand planningplanning ofofvariousvarious commercialcommercial buildingbuilding –– STST liabilityliability dischargeddischarged onon considerationconsiderationpaidpaid toto SPSP
RevenueRevenue demandingdemanding STST onon incomeincome taxtax paidpaid toto thethe GovtGovt.. onon thethe saidsaid RevenueRevenue demandingdemanding STST onon incomeincome taxtax paidpaid toto thethe GovtGovt.. onon thethe saidsaidForeignForeign Architect’sArchitect’s servicesservices onon thethe basisbasis thatthat lumpsumlumpsum amountamount paidpaid totoforeignforeign partyparty isis netnet ofof taxestaxes..
Tribunal’sTribunal’s findingfinding onon FactsFacts && ConclusionsConclusions –– TaxTax dischargeddischarged onon amountamount paidpaid toto foreignforeign architectarchitect IncomeIncome taxtax paidpaid
byby appellantappellant outout ofof itsits ownown pocketpocket AppellantAppellant hadhad notnot recoveredrecovered thethe amountamount ofof incomeincome taxtax paidpaid fromfrom
11th January 2017 A. R. Krishnan & Co.92
pppp ppthethe serviceservice providerprovider && thatthat thethe incomeincome taxtax paidpaid isis notnot aaconsiderationconsideration forfor thethe servicesservices
InIn viewview ofof ss.. 6767 readread withwith RR.. 77((ii)) ofof ValuationValuation RulesRules1,, STST toto bebedischargeddischarged onlyonly onon amountsamounts billed/billed/ chargedcharged byby SPSP..
1 Deleted w.e.f. 01.07.2012
22 4747
Important CaseImportant Case--laws of 2016 in Service taxlaws of 2016 in Service tax
By ABy A. R. Krishnan . R. Krishnan
email: [email protected]: [email protected]
[email protected]@gmail.com
January 11 2017January 11 2017January 11, 2017January 11, 2017
Bombay Chartered Accountants SocietyBombay Chartered Accountants Society